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May 2, 2001

Natural Selection

Beggars can't be choosers, but successful advisors

Everyone has heard the investment advisory axiom that you get 80% of your revenues from the top 20% of your clients. Paine Webber UBS Warburg advisor Glen Titan, however, actually took the saying to heart. He has gone from over 300 clients four years ago to a lean 32 today--and he's raised his net income each year in the process.

"I've completely changed the way I work and live my life," says the 40-year-old Beverly Hills, California-based planner. "I get much more satisfaction from what I do, I make more money, and I've probably added 20 years on to my life expectancy. Everyone should do this."

Wondering how he did it? Here's his story.

Titan took a job right out of college with Big Five accounting firm Coopers & Lybrand. As a CPA auditing Wall Street brokerage houses, he developed a taste for the brokerage business. In 1986, he decided to take a job with Drexel Burnham. "The excitement really drew me," he says, "I wanted in."

At Drexel, he was trained in the traditional full-service brokerage mold. He was taught to work at a harried pace during market hours, keep one eye on the Dow all day long, and measure his progress in terms of "dials," or the number of cold calls he could make. "We sold the hot stock of the month," he says. "I would call up customers and make the push all day long."

When Drexel went out of business in 1989, Titan moved on to Prudential before eventually ending up at Chase Manhattan Bank in 1991. It was the first retail brokerage office that Chase opened in Southern California, and it grew like mad. "The phone was absolutely ringing off the hook," he says. "Money was pouring in from every direction." Indeed, over the next five years, Titan saw his client rolls swell to more 300 people.

A Knot in His Stomach

Despite his success, something felt wrong. Titan was working until hours after the close each night, calling what seemed like a never-ending list of clients. And the phone never seemed to stop ringing. "The phone would ring and I would get a knot in my stomach at times," Titan says. "It wasn't good."

So when Chemical Bank took over in 1996 and downsized the entire unit, Titan decided to use the money in his severance package to hire Atlanta-based Paragon Resources, Inc., a consulting firm for fee-based businesses. Titan had slowly been moving his business in that direction--about 70% of his revenues already came from fee-based assets under management--and he wanted Paragon to help him continue the trend.

He took the next 16 Fridays off from his new job at Everen Securities to complete Paragon's online workbook and questionnaires, which he says forced him to examine every aspect of his business, life, and future goals. "After finishing, I would talk on the phone with Paragon coaches about my responses," says Titan. "It was the most introspective period of my entire life."

The result was that at the end of the course Titan either spoke over the phone or face-to-face with all of the clients he had amassed from job-to-job. He told about 250 of them that he was looking to transfer his investment business entirely to a fee structure that would include a greater variety of services. (His remaining commission work is for bonds and insurance products.) He told them that the 0.5% to 1.5% annual fee for estate planning, asset allocation, money management, insurance advice and more was not worth it for any account under $1 million. However, very importantly, he also informed the people he was keeping on of his intentions and how he hoped to offer them more specialized services, greater attention, and better advice.

Getting Results

Three things happened. The first was that people who were getting the proverbial boot understood and appreciated the honesty. Some even wound up referring friends and family who fit the profile. "I couldn't believe it," says Titan. "There were no arguments or unhappiness."

The second thing is that his relationship with his remaining clients grew deeper. Many immediately began transferring more of their assets under his management. "I might have had 25% of their total assets in the past, but now that I was their advisor rather than their stockbroker, they brought a lot more and sometimes all to me," says Titan.

The third effect was that Titan was able to change the way he did business. Today, the Quotron is permanently off, and he says he can't even tell you how the market has done most days. Instead, he spends his time researching products, going to conferences, networking with other professionals in his area, and most importantly, getting to know his clients and their financial situations in a much more personal fashion. "I know everything about them now," says the man who's increased the duration of quarterly check-ups to two hours from the previous 20 minutes. "I'm like a psychiatrist just as much as I am their financial advisor."

In fact, the "pruning" was so successful that he recently enacted another round of "layoffs" where he further whittled down his rolls from 50 to the current list of 32.

Titan says the best advice he can impart is the importance of having the courage to take such a plunge. "Everyone talks about cutting down, but you don't know how hard it is," he says. "Getting rid of assets is hard, even if they are dead or small accounts."

But he's never looked back. Now, he simply strides past his 100 or so colleagues as they jump from one phone call to the next, and smiles contentedly.

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